This May, CNBC + Acorns Invest in You: Ready. Set. Grow. is focusing on the basic principles of investing.
Risk is at the basis of many of our investment-making decisions. It affects not only how we approach investing but also how we save for retirement. Because risk is one of the most fundamental financial concepts of investing, it is critically important that people understand it.
The Global Financial Literacy Excellence Center has been studying risk for years. Across countries and educational levels, we have found that risk is by far the most difficult topic for people to comprehend.
Risk is a fundamental topic and yet everything about it is complicated.
Through our research, we have found that those with a good grasp of risk concepts are more likely to make better financial decisions. They avoid investment mistakes that can have a big impact on their financial well-being.
So, do you know the difference between risk and return? How well do you understand risk?
Answer these three questions to find out.
If you'd like to take this quiz in Spanish, please visit Telemundo.
Annamaria Lusardi is the Denit Trust Endowed Chair of Economics and Accountancy at the George Washington University School of Business Founder and Academic Director of GWSB's Global Financial Literacy Excellence Center. She is a member of CNBC's Financial Wellness Advisory Council.
Disclosure: NBCUniversal and Comcast Ventures are investors in Acorns.